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Restaurant DSCR Calculator

Measure restaurant DSCR from annual, monthly, or projected operating income and debt payments. See coverage status, debt capacity, and recommendations.

Restaurant DSCR formulas

Formula
DSCR = Net Operating Income / Debt Service

Debt Capacity = Net Operating Income / Target DSCR
  Target DSCR = 1.25

Monthly mode:
  Monthly DSCR = Monthly Operating Income / Monthly Debt Payments
  Annual Equivalent = Monthly DSCR x 12

Projected mode:
  Income_t = Projected Income x (1 + Growth Rate)^(t - 1)
  DSCR_t = Income_t / Projected Debt Payments

Benchmark (DSCR):
  Excellent: 2.00 or above
  Good: 1.50 to below 2.00
  Average: 1.25 to below 1.50
  Low: 1.00 to below 1.25
  Critical: below 1.00

What it means

DSCR measures whether operating income covers debt service. Annual and monthly modes use the same ratio on period-matched figures. Projected mode grows income while holding debt payments constant. This page is not Loan (payment schedule), Working Capital (liquidity snapshot), Cash Flow Forecast (operating bank timing), NPV or IRR (capital return), ROI or Payback (investment return), or Break-even (volume floor).

Good to know

  • NOI and debt payments cover the same period.
  • Debt payments include principal and interest.
  • Projected mode holds debt service constant while income grows.

Ideal range

  • Not Loan. Use the Loan Calculator to size amortizing payments.
  • Not Working Capital or Cash Flow Forecast. Use those for liquidity and bank timing.
  • Not NPV, IRR, ROI, or Payback. Use those for capital project returns.

Variables

NOINet operating income
Income available for debt service in the period.
Debt ServiceDebt payments
Principal plus interest due in the same period.
DSCRCoverage ratio
NOI divided by debt service.
Debt CapacitySupportable debt service
NOI divided by the 1.25 target coverage ratio.

Assumptions

  • Benchmark bands reflect common independent restaurant lending checks.

Limitations

  • No tax shields, balloon payments, or covenant carve-outs.

Worked examples

Real numbers through the same formula this tool uses.

  1. 1
    Restaurant scenarioExample 1

    120k NOI and 60k annual debt

    DSCR of 2.00, debt capacity of 96000 at a 1.25 target, excellent status.

  2. 2
    Restaurant scenarioExample 2

    15k monthly income and 10k monthly debt

    Monthly DSCR of 1.50, annual equivalent of 18, good status.

How to use the restaurant DSCR calculator

Pick annual, monthly, or projected mode, enter income and debt service, then read coverage and capacity.

  1. Choose annual, monthly, or projected coverage

    Use annual for lender packets, monthly for cash timing stress, and projected for growth plans.

  2. Enter operating income for the period

    Use NOI available for debt service, not gross sales alone.

  3. Enter debt payments for the same period

    Include principal and interest due in that window.

  4. Read DSCR, status, and debt capacity

    DSCR drives the five-tier benchmark from Excellent to Critical.

  5. Pair results with Loan and Cash Flow Forecast

    Confirm payment size and whether deposits clear after debt service.

How to read restaurant DSCR

DSCR compares operating income available for debt service to the debt payments themselves. It is a coverage score, not a loan payment schedule or a liquidity snapshot.

  • Start with the DSCR number

    A ratio of 1.00 means income exactly covers debt service. Higher ratios add cushion.

  • Excellent (2.00 or higher)

    Strong coverage for many restaurant lenders and cash stress tests.

  • Good or Average

    Workable coverage. Average often sits near a common lender floor around 1.25.

  • Low or Critical

    Thin or broken coverage. Raise income or cut debt service before adding leverage.

  • Debt capacity

    Shows how much annual debt service NOI can support at a 1.25 target ratio.

Best practices for restaurant DSCR

DSCR is useful when NOI and debt payments come from the same period and include the full debt service load.

  • Use NOI available for debt service

    Start from operating income after normal operating costs, before debt principal and interest.

  • Include principal and interest

    Missed principal payments make coverage look healthier than the bank will allow.

  • Check monthly coverage on soft weeks

    Annual DSCR can hide months where deposits and debt due dates do not line up.

  • Pair with Loan and Cash Flow Forecast

    Loan tools size the payment. Cash flow forecast checks whether deposits clear after debt service.

Common restaurant DSCR mistakes

These errors make debt coverage look stronger than the operating account can support.

  • Confusing DSCR with a loan payment calculator

    Loan tools estimate amortizing payments. DSCR asks whether income covers those payments.

  • Confusing DSCR with working capital

    Working capital compares current assets to current liabilities. DSCR compares income to debt service.

  • Confusing DSCR with cash flow forecast

    Cash flow forecast projects bank movement over time. DSCR is a coverage ratio for debt service.

  • Confusing DSCR with NPV or IRR

    NPV and IRR score capital project returns. DSCR scores whether operations cover existing or planned debt.

People also ask

Short answers owners ask when they measure restaurant debt service coverage.

  • What does the restaurant DSCR calculator do?

    It divides operating income by debt service to show coverage, capacity, and a five-tier status.

  • How do you calculate restaurant DSCR?

    Divide net operating income by debt payments for the same period. Monthly mode uses monthly figures.

  • What is a good DSCR for a restaurant?

    Many lenders look for at least 1.25. In this calculator, 1.50 to 1.99 is good and 2.00 or higher is excellent.

  • What is debt capacity in this calculator?

    It is NOI divided by a 1.25 target DSCR, showing how much annual debt service that income can support.

  • How is DSCR different from the loan calculator?

    The loan calculator estimates payment size. DSCR checks whether operating income covers that payment.

  • How is DSCR different from working capital?

    Working capital is a balance sheet liquidity snapshot. DSCR is an income-to-debt-service coverage ratio.

  • How is DSCR different from cash flow forecast?

    Cash flow forecast projects deposits and outflows over time. DSCR isolates coverage of debt service.

  • How is DSCR different from NPV?

    NPV discounts project cash flows at a chosen rate. DSCR measures whether operations cover debt payments.

  • How is DSCR different from IRR?

    IRR solves the return rate that sets project NPV to zero. DSCR scores debt coverage from operating income.

  • What does a DSCR below 1.00 mean?

    Operating income does not cover debt service in the model. Coverage is critical.

Related tools and next steps

Use these when DSCR results need payment sizing, liquidity, or capital return context.

  • Restaurant Loan Calculator

    Estimate amortizing payments before you test coverage.

  • Restaurant Cash Flow Forecast Calculator

    Confirm deposits clear after debt service in the operating account.

  • Restaurant Working Capital Calculator

    Check near-term assets vs liabilities beside debt coverage.

  • Restaurant NPV Calculator

    Score discounted project value when debt funds a capital project.

Frequently asked questions

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